Alphabetical Index

Terms and Definitions

A

A provision of a mortgage, loan, or the like that advances the date of payment under certain circumstances.

Accelerated Depreciation:

Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset.

Add-on Interest:

A method of calculating interest by adding the interest payable to the full amount of the principal loan. The add-on interest is added to the original principal amount, and becomes a part of the face amount of the promissory note.

Adjustable-rate Mortgage (ARM):

A mortgage with a periodically changing interest rate.

Adjusted Cost Basis:

A number that shows whether you profit when selling your house (used for tax purposes).

Adverse Possession:

Open and exclusive occupation and use of someone else's real property without permission of the owner continuously for a period of years prescribed by law, thereafter giving title to the occupier-user.

Adverse Use:

The use of someone else's property without owner's consent.

Agent:

A person authorized to act on behalf of/represent the interests of another person.

An elite HomeGain program in which members must have earned a minimum of $75,000 in gross commissions from their HomeGain leads.

AgentEvaluator Platinum Club:

An elite HomeGain program in which members must have earned a minimum of $125,000 in gross commissions from their HomeGain leads.

AgentEvaluator Silver Club:

An elite HomeGain program in which members must have earned a minimum of $50,000 in gross commissions from their HomeGain leads.

Agent Success Newsletter:

HomeGain's monthly e-newsletter that provides real estate agents and brokers with advice, news and special promotions. Sign up to receive the Agent Success Newsletters or read past newsletters at www.homegain.com/media-center/newsletters

Agreement of Sale:

A document that specifies the terms under which ownership of real estate property are conveyed from one owner to another.

American Society of Home Inspectors:

A non-profit professional organization of Home Inspectors.

Amortization:

Mortgage/loan payment through a series of periodic payments.

Annual Mortgagor Statement:

A yearly report sent to the mortgagee borrower showing the mortgage payments for the year and the remaining loan amount owed.

Annual Percentage Rate (APR):

The interest rate reflecting the total yearly cost of the interest on a loan, expressed as a percentage rate.

Annuity:

A contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years.

Appraisal:

An expert estimation, assessment, of a home value.

Appraisal Report:

A document summarizing all the details of the home appraisal.

Appraised Value:

An overall price of a home as assessed by a professional appraiser.

Appreciation:

An increase or rise in the value of property over a certain time.

Arbitration:

The settling of differences between parties by a third-party person or persons chosen or agreed to by them.

Assessed Value:

The value of real estate property as determined by an assessor.

Assumable Mortgage:

A mortgage that is transferable from the home seller to the buyer once purchasing a home.

Assumption Clause:

A part of the mortgage contract that lets a home buyer take on seller's mortgage.

B

Concurrent closing of escrow for the purchase of one property and sale of another by the same party.

Backup Offer:

A second offer for the property, used in case the sale using the first offer doesn't work out.

Balance Sheet:

A statement of the financial position of a business on a specified date.

Balloon Mortgage:

A short-term mortgage in which small periodic payments are made until the completion of the term, at which time the balance is due as a single lump-sum payment.

Balloon Payment:

A final loan payment that is significantly larger than the payments preceding it.

Before-tax Income:

Overall earnings without the tax deductions.

Bidding War:

A situation when a number of buyers compete for a property by submitting higher offers.

Bilateral Contract:

A contract involving mutual promises.

Bill of Sale:

A document transferring title in personal property from seller to buyer.

Blanket Insurance Policy:

Insurance policy that covers a number of properties.

Blanket Mortgage:

A mortgage that covers a number of properties instead of one.

Blog:

A blog is a website in which entries provide commentary or news on a particular subject; a publishing tool.

Blog Author:

Someone who writes and submits articles to be published on a blog.

Board of Equalization:

A state board in charge of local property taxes.

Breach of Covenant:

Lack of fulfillment of a legal contract.

Breach of Warranty:

A breach that occurs when an item is deficient according to the terms of a warranty.

Brokerage:

A firm engaged in buying and selling real estate for clients.

Broker:

An agent who buys or sells real estate for a client on a commission basis without having title to the property.

Building Code:

Set of standards established and enforced by local government for the structural safety of buildings.

Building Moratorium:

A temporary stop of home construction.

Bundle of Rights:

Various rights of the owner associated with property ownership.

Buyer Broker:

A broker exclusively focused on representing home buyers.

BuyerLink:

A pay-per-visit HomeGain marketing program for real estate agents and brokers. Members receive increased web traffic to their website and are able to connect with home buyers in their market. Visit www.homegain.com/buyerlink.

Buyer's Market:

A market condition characterized by low prices and a supply of commodities exceeding demand.

C

A condition in a contract that allows its termination prior to its expiration.

Capital Expenditure:

Funds spent for the acquisition of a long-term asset.

Capital Gains Tax:

The tax applicable to gains realized from the sale of capital assets.

Capitalization:

The total investment of the owner/s in a business enterprise.

Capitalization Rate:

The rate used to convert an income stream into a present value lump sum.

Certificate of Deposit (CD):

A written acknowledgment of a bank that it has received from the person named a specified sum of money as a deposit, often for a fixed term at a specified interest rate.

Certificate of Occupancy:

A certificate issued by a local authority indicating that a building meets building-code requirements.

Certificate of Title:

A certificate of ownership stating that the title to the specified property is free and clear except for any encumbrance (as a mortgage) listed on it.

Chain of Title:

The succession of conveyances of the title to a particular item of real property (as a house).

Classified Ventures:

Classified Ventures, LLC is a strategic joint-venture 100% owned and funded by five large media partners whose objectives are to collectively capitalize on the revenue growth in the real estate and automotive online advertising categories. Strategic partners include Belo Corporation, Gannett Company Inc., The McClatchy Company, Tribune Company and The Washington Post Company.

To execute on its objectives, CV has three leading online businesses -- Apartments.com, Cars.com and HomeGain.com. CV also builds real estate-related business software products for its partners through its Homescape division. In addition to the national web sites, Apartments.com and Cars.com also are carried by our partner's local affiliate network of more than 170 online newspaper and television web sites. Visit www.classifiedventures.com.

Closing:

The final procedure in a home sale in which documents are signed and recorded. This is the time when the ownership of the property is transferred.

Closing Costs:

Expenses over the purchase price of a house, land, etc., that is paid by the purchaser or seller at the completion of the sale.

Closing Statement:

A document commonly used in real estate transactions, detailing the fees, commissions, insurance, etc. that must be transacted for a successful transfer of ownership to take place. This document is prepared by a closing real estate agent and is also known as a "settlement sheet".

Cloud on Title:

Interest (as a lien) in real property that if valid impairs the owner's title.

Co-insurance:

A co-sharing agreement between the insured and the insurer under a health-insurance policy which provides that the insured will cover a set percentage of the covered costs after the deductible has been paid. Similar to co-pay insurance plans except co-pays require the insured to pay a set dollar amount at the time the service is rendered.

Commission:

A sum or percentage allowed to agents, sales representatives, etc., for their services.

Community Reinvestment Act:

A United States federal law that requires banks and thrifts to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as "redlining." The purpose of the CRA is to provide credit, including home ownership opportunities to underserved populations and commercial loans to small businesses.

Comparative Market Analysis (CMA):

The best method available to home sellers to learn their home's current value so they can select the best sale price is a CMA, or Comparative Market Analysis. CMA is the term real estate agents use when they conduct an in-depth analysis of a home's worth in today's market.

Compound Interest:

Interest paid on both the principal and on accrued interest.

Consumer Credit Counseling Service (CCCS):

CCCS is an organization that offers free credit counseling and a nonprofit debt management program.

Contingency Fee:

A fee paid to a lawyer conducting a suit, esp. a suit for damages, in the event that the suit is successful and generally based on a percentage of the sum recovered.

Conveyance Tax:

A tax imposed on the transfer of real estate property.

CPM:

Cost per thousand. Online advertising model where the advertiser pays per thousand of impressions.

Cost-plus Contract:

A contract in which the contractor is paid his total cost plus a stated percentage of profit.

Covenants, Conditions and Restrictions (CC&Rs):

CC&Rs are the governing documents that dictate how the homeowners association operates and what rules the owners must obey.

Credit Rating:

A classification of credit risk based on investigation of a customer's financial resources, prior payment pattern, and personal history or degree of personal responsibility for debts incurred.

Credit Report:

A credit report is a detailed report of an individual's credit history prepared by a credit bureau and used by a lender to in determining a loan applicant's creditworthiness.

Curb Appeal:

Curb appeal will help increase the value of a home with updates to landscaping and the home's exterior.

Customer Advocate of the Month:

A HomeGain program in which, each month, HomeGain recognizes one employee who upholds and represents HomeGain's high standards of customer care.

D

A written instrument legally conveying property to a trustee often used to secure an obligation such as a mortgage or promissory note.

Deferred Maintenance:

Deferred maintenance is a practice of allowing something to deteriorate by postponing prudent but non-essential repairs to save cost, labor and/or material.

Delinquent Mortgage:

A mortgage for which the borrower has failed to make payments as required in the loan documents. If the borrower can't bring the payments current within a certain time period, the lender may initialize foreclosure proceedings.

Down Payment:

An initial amount paid at the time of purchase.

Dual Agency:

Dual Agency is the process by which one real estate broker represents both the home seller and the buyer in a transaction.

Due-on-sale Clause:

A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.

E

End Loan:

A permanent, long-term loan used to pay off a short-term construction loan or other form of interim financing.

Environmental Impact Statement:

A technical report that details the effect proposed legislation or action will have on the natural and human environment and that is sometimes required to be furnished esp. by a governmental body for official and public review in the regulatory and decision-making process called also an "environmental impact report."

Equal Credit Opportunity Act (ECOA):

The ECOA is a United States law that states that creditors must evaluate candidates based on credit worthiness only, not on factors that have nothing to do with their ability to repay the debt.

EMarketing:

Achieving marketing objectives through use of electronic communications technology.

Escrow:

A contract, deed, bond, or other written agreement deposited with a third person, by whom it is to be delivered to the grantee or promisee on the fulfillment of some condition.

Examination of Title:

A close examination of all public records that affect the title to the real estate being purchased.

Exclusive Leads:

Leads that are not shared with or distributed to other real estate agents. HomeGain's Source4Sellers program provides real estate agents with exclusive homeowner leads within specific ZIP codes.

Exclusive Listing:

A written contract in which a licensed real estate agent is given the sole right to sell a property for a specified time (typically three months); during that time the owner is still allowed to try to sell the property on his/her own, without the payment of a commission.

F

A United States federal law enacted as an amendment to the Truth in Lending Act whose purpose is to protect consumers from unfair billing practices.

Fair Credit Reporting Act (FCRA):

An American federal law that regulates the collection, dissemination, and use of consumer credit information.

Fair Debt Collection Practices Act (FDCPA):

A United States statute whose purpose is to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy.

Fair Housing Act:

The Fair Housing Act prohibits discrimination by direct providers of housing, such as landlords and real estate companies.

Federal Housing Administration (FHA):

FHA provides mortgage insurance on loans made by FHA-approved lenders.

Federal National Mortgage Association:

A U.S. government-sponsored private corporation whose chief function is to supply funds for home mortgages through continuous purchases of mortgages from lending institutions.

Fixed Installment:

The monthly payment due on a mortgage loan.

Fixed-rate Mortgage:

A home mortgage for which equal monthly payments of interest and principal are paid over the life of the loan, usually for a term of 30 years.

Foreclosure:

A proceeding in which the financer of a mortgage seeks to regain property because the borrower has defaulted on payments.

Forfeiture:

The loss of an asset, or rights to an asset, as a result of defaulting on contractual obligations or conditions.

For Sale By Owner (FSBO):

FSBO is a real estate term which describes the situation in which a property is offered for sale directly by its owner and without that owner having solicited the help of a real estate broker, implying that no real estate commission is associated with the sale.

Real estate agents and brokers use HomeGain's real estate marketing solutions and real estate marketing tools to connect with consumers, promote their services and grow their business. HomeGain receives an average of over five million unique website visits per month. Visit www.homegain.com.

HomeGain Real Estate Blog:

A real estate blog by agents, brokers, industry experts, and people of HomeGain to connect the real estate community. Find advice, ideas, opinions and more by Realtors®, for Realtors®. Visit http//blog.homegain.com.

Homeowners' Association (HOA):

HOA is the legal entity created by a real estate developer for the purpose of developing, managing and selling a community of homes.

Homeowners' Insurance:

Homeowners insurance provides coverage in the event of damage to your property, as well as liability for injuries and damage you cause to other people.

Homeowners' Warranty:

A home warranty offers benefits for both home buyers and sellers. It can help protect persons involved in a real estate transaction from unforeseen repair/replacement costs and problems on covered items.

Home Sale Maximizer:

A tool for homeowners who are looking to sell their home. This special real estate tool will help sellers decide where to spend money to increase the value of your home and property. Visit www.homesalemaximizer.com.

Homescape:

Homescape provides local, comprehensive property listings and rich content to home buyers and sellers nationwide, while delivering a suite of advertising solutions that offer choice and results that enable real estate professionals to grow their business. Homescape is a subsidiary of Classified Ventures, LLC.

HomeScout:

HomeScout helps home buyers find homes for sale on the Internet as listed by the MLS. Home listings are offered by HomeGain RealtorsŪ and The Real Estate Book, new homes from premier homebuilders are offered by NewHomeSource and unusually good deals on foreclosed homes are offered by Foreclosure.com. Visit www.homescout.com.

Home Warranty:

An insurance contract that covers the repair and replacement costs of home appliances.

HomeWatch Newsletter:

A consumer newsletter that is emailed out bi-monthly that provides advice, tips and recent home sales.

Housing Expense Ratio:

This ratio compares the sum of monthly housing expenses to monthly gross income.

I

IDX:

Web functionality that allows a website to display local MLS listings.

Impact Fees:

A fee that is implemented by a local government on a new or proposed development to help assist or pay for a portion of the costs that the new development may cause with services to the new development within the United States.

Implied Warranty of Habitability:

A warranty implied by law that by leasing a residential property, the lessor is promising that it is suitable to be lived in, and will remain so for the duration of the lease.

Income Property:

Real estate that produces current income, typically from rental payments.

Interest-only Loan:

A loan in which for a set term the borrower pays only the interest on the principal balance, with the principal balance unchanged.

Interest Rate:

The percentage of a sum of money charged for its use.

Internet Traffic:

The flow of data around the Internet. It includes web traffic, which is the amount of that data that is related to the World Wide Web, along with the traffic from other major uses of the Internet, such as electronic mail and peer-to-peer networks.

M

Market Condition:

Characteristic of a market into which a firm is entering or into which a new product will be introduced, such as number of the competitors, level or intensity of competitiveness, and the market's growth rate.

Market Value:

Highest estimated price that a home buyer would pay and a home seller would accept for an item in an open and competitive market.

Marketing:

A process which discerns consumers' wants, focusing on a product or service to fulfill those wants, attempting to move the consumers toward the products or services offered. Marketing is fundamental to any businesses growth. Marketing essentially is the process of creating or directing a business or organization to be successful by selling a product or service that people not only desire, but are willing to buy.

Median Price:

The threshold which divides the real estate market into two equal halves, in reference to pricing. One half of all homes in the market were sold at a price above the median home price, while the other half were sold below that price.

Money Market Account:

A savings account that offers the competitive rate of interest (real rate) in exchange for larger-than-normal deposits. Also known by the acronym "MMDA", which stands for "money market demand account" or "money market deposit account".

Mortgage Acceleration Clause:

A common provision of a mortgage or note providing the holder with the right to demand that the full outstanding balance is immediately due in the event of default.

Mortgage Broker:

The matchmaker between a homebuyer and a lender with the goal of them originating a mortgage loan. The broker draws from a pool of various lenders to find the right match.

Multiple Listing Service (MLS):

A group of private databases which allows real estate brokers representing sellers under a listing contract to widely share information about properties with real estate brokers who may represent potential buyers or wish to cooperate with a seller's broker in finding a buyer for the property.

Municipal Housing Inspector:

Inspectors employed by cities or counties to check all construction sites and verify that contractors are meeting building codes.

N - O

National Association of Realtors® (NAR):

NAR, whose members are known as Realtors, is North America's largest trade association representing over 1.2 million members (as reported February 2008), including NAR's institutes, societies, and councils, involved in all aspects of the residential and commercial real estate industries. NAR also functions as a Self Regulatory Organization for real estate brokerage.

NAR's membership is composed of residential and commercial real estate brokers, real estate salespeople, immovable property managers, appraisers, counselors, and others engaged in all aspects of the real estate (immovable property) industry, where a state license to practice is required.

Negative Amortization:

The increase of the principal of a loan by the amount by which periodic loan payments fall short of the interest due, usually as a result of an increase in the interest rate after the loan has begun.

Net Cash Flow:

Income from an investment property after expenses such as principal, interest, taxes, and insurance are subtracted.

No Cash-out Refinance:

The refinancing of an existing mortgage for an amount equal to or less than the existing outstanding loan balance plus an additional loan settlement cost. It is done primarily to lower the interest rate charge on the loan and/or to change the term of the mortgage.

Offline Marketing:

Marketing tactics that include non-Internet related vehicles, such as TV, radio, direct mailings and yard signs.

Open Listing:

A property that is simultaneously marketed by multiple real estate agents.

P

A loss incurred through a rental property, limited partnership, or other enterprise in which the individual is not actively involved.

Pay-Per-Click (PPC):

Online marketing model in which payment is based on the number of users who click on the ad leading to the advertised website.

Pay-Per-Lead (PPL):

Online advertising payment model in which payment is based solely on the number of leads.

Percolation Test:

A test to determine the absorption rate of soil for a septic drain field, in which the results are required to properly design a septic system.

Per-diem Interest:

The amount of interest that is earned or that accrues on a daily basis.

Pre-approval Letter:

A pre-qualification letter simply states that you are "qualified" to purchase a home in a certain price range.

Prepaid Interest:

The interest on a loan that has been paid but is not due until a following period. The Internal Revenue Service (IRS) does not allow taxpayers to claim an itemized deduction on tax returns for prepaid interest.

Prepayment Penalty:

A provision of your contract with the lender that states that in the event you pay off the loan entirely, you will pay a penalty. Penalties are usually expressed as a percent of the outstanding balance at time of prepayment, or a specified number of months of interest. Usually, prepayment penalties decline or disappear over time.

Probate Sale:

The sale of a property due to the death of the owner with the proceeds divided among creditors or legal heirs of the deceased.

Property Report:

Summary of facts about undeveloped land required to be given to purchasers.

Property Tax:

A tax based on the market value of the property as assessed by the county assessor's office.

Property Tax Deduction:

The US tax code allows homeowners to deduct the amount they have paid in property taxes.

Proration:

The allocation of property taxes, interest, insurance premiums, rental income, etc., between buyer and seller proportionate to time of use.

Purchase Agreement:

A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under stated terms and conditions.

A website where real estate topics are discussed by the author, or in the HomeGain Blog, a network of authors.

Real Estate Broker:

An agent employed to effect bargains and contracts, as a middleman or negotiator, between other persons, for a compensation commonly called brokerage.

Real Estate Investment Trust (REIT):

An unincorporated trust created for the purpose of investing in real property or to extend credit to those engaged in construction.

Real Estate Settlement Procedures Act (RESPA):

RESPA controls or prevents certain undisclosed amounts of money between various companies that were associated with the buying and selling of real estate, such as lenders, realtors, and title insurance companies, which was inflating the costs of real estate transactions and obscuring price competition by facilitating bait and switch tactics.

Real Property:

An estate or property consisting of lands and of all appurtenances to lands, as buildings, crops, or mineral rights.

Realtor:

A person who works in the real-estate business and is a member of the National Association of Real Estate Boards, or one of its constituent boards, and abides by its Code of Ethics.

Recording Fee:

The fee a government charges for reporting a real estate purchase or sale into the public record.

Refinance:

To provide new financing or new financing for, as by discharging a mortgage with the proceeds from a new mortgage obtained at a lower interest rate.

Repayment Plan:

A Repayment Plan will take a delinquent amount and allow small amounts of money to be added to each Mortgage payment until the delinquency is caught up.

Return on Investment (ROI):

ROI is the amount of profit or cost saving that is realized as a result of an investment.

Right of First Refusal:

A contractual right granted by the owner of property, that gives the holder of the right an option to enter a business transaction with the owner, according to specified terms, before the owner is entitled to enter that transaction with a third party.

Rural Housing Service (RHS):

An agency of the United States Department of Agriculture (USDA). Located within the Department's Rural Development mission area, RHS operates a broad range of programs to provide homeownership options to individuals; housing rehabilitation and preservation funding; rental assistance to tenants of RHS-funded multi-family housing complexes; farm labor housing; help to developers of multi-family housing projects, like assisted housing for the elderly and disabled, or apartment buildings; and community facilities, such as libraries, child care centers, schools, municipal buildings, and firefighting equipment to Indian groups, nonprofit organizations, communities and local governments.

S

Sale Leaseback:

The disposal of a building, land, or other property to a buyer under special arrangements for simultaneously leasing it on a long-term basis to the original seller, usually with an option to renew the lease.

Secured Loan:

A loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan.

Seller Broker:

A broker who has a fiduciary responsibility to the seller.

Seller's Market:

A market condition characterized by high prices and a supply of commodities below demand.

Social Media:

An umbrella term that defines the various activities that integrate technology, social interaction, and the construction of words and pictures. Examples include blogs, forums, message boards, social networking sites, video and photo sharing etc.

Social Networking:

The use of a website to connect with people who share personal or professional interests, place of origin, education at a particular school, etc.

Shared-equity Transaction:

A transaction in which two buyers purchase a property, one as a resident co-owner and the other as an investor co-owner.

Standard Payment Calculation:

The monthly payment required to repay the remaining balance of a mortgage in equal installments over the remaining term of the mortgage at the current interest rate.

Sub-agent:

An agent who is appointed by another agent (as an insurance agent) and for whom the principal agent is responsible or liable.

Sweat Equity:

Unreimbursed labor that results in the increased value of property or that is invested to establish or expand an enterprise.

T

Lien of which a tax collector may avail himself in default of taxes (analogous to a judgment lien).

Tax Sale:

The sale of real property, as land, usually at auction by a public authority, in order to pay delinquent taxes assessed upon its owner.

Teaser Rate:

The initial interest rate on an adjustable rate mortgage (ARM).

Third-party Origination:

A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

Title:

Legal right to the possession of property, esp. real property.

Title Insurance:

Insurance that compensates for loss from title defects or encumbrances (as liens) that were unknown but should have been discovered at the time the policy was issued.

Total Expense Ratio:

The Total Expense Ratio, or TER, is measuring the total costs of a fund investment. Total costs may include various fees (trading, auditing) and other expenses. The TER is calculated by dividing the total cost by the fund's total assets and is denoted as a percentage.

Traffic:

The number of visitors that land on a website or web page.

Transfer of Ownership:

The means/procedure by which the ownership of a property changes hands.

Transfer Tax:

A tax on the transfer of securities that is paid by the seller.

Trust Account:

An account opened with a trust company, such as a bank, under which a testamentary trust is set up (as for the escrow of funds).